Big foreign investors seem to be gradually warming up to the idea of investing in distressed assets in the country. Kotak Mahindra Group on Monday signed an agreement with Canada Pension Plan Investment Board (CPPIB) to invest up to $525 million (about Rs. 3,523 crore) in stressed assets. According to a joint statement issued by Kotak Mahindra Group and CPPIB, the latter could invest up to $450 million (about Rs. 3,020 crore).
The agreement to invest in stressed assets comes in the backdrop of the Reserve Bank of India setting a March 2017 deadline for banks to clean-up their balance-sheets. Credit rating agency Crisil recently cautioned that the asset quality problems being faced by public sector banks (PSBs) will remain acute and continue through most of the next fiscal. The resultant impact on profitability and capitalisation can further dent their credit profiles over the medium term.